The Nonlinear Influence of Digital Finance on Green Economic Efficiency: Evidence from China

Abstract Digital finance (DF) has an essential impact on improving green economy efficiency (GEE) by demonstrating environmental friendliness in promoting technological innovation and the flow of factors. Based on the panel data of 30 provinces in China from 2011 to 2020, this paper uses the super-efficiency SBM model with undesirable outputs to measure the provincial GEE. It tests the nonlinear impact of DG on green economic efficiency. Additionally, a heterogeneity analysis has been conducted. The conclusions are: (1) a significant, positive U-shaped nonlinear relationship exists between DF and GEE. The robustness test and the instrumental variable model verify that the results are still valid; (2) the results of the heterogeneity analysis illustrate that the U-shaped relationship between DF and GEE is significant in undeveloped regions. In contrast, it shows a linear promoting effect in the developed areas; (3) mechanism research demonstrates that the regional technological innovation level is an effective mechanism of the U-shaped relationship; (4) the moderating effect test establishes that environmental regulation can positively moderate the nonlinear relationship between DF and GEE. Therefore, the government can give free rein to the functions of DF to improve the efficiency of the green economy.